Hewehi Market Updates

The major indices are holding near their best levels of the session. Financials (+1.9%) led the recent buying interest, taking the leadership spot from the energy sector (+1.5%).

Market breadth leans bullish. Advancers outpace decliners by more than 2-to-1 on the NYSE and by 4-to-3 on the Nasdaq. New 52-week highs outpace new lows by 61-to-1 on the NYSE, and are even on the Nasdaq. Volume is on the light side.DJ30 +93.30 NASDAQ +14.61 SP500 +12.43 NASDAQ Dec/Adv/Vol 1180/1616/802 mln NYSE Dec/Adv/Vol 951/2097/530 mln

The stock market has maintained last week’s bullish bias. At midday, the stock market is posting a substantial gain, with all ten economic sectors in positive territory. Market moving news has been relatively slow this session, with only one economic report set for release later in the afternoon, and no earnings reports.

Shares of Washington Mutual (WM 23.99, +2.44) have soared 24% on reports that it is close to a deal that will supply the struggling company with $5 billion in capital. The Wall Street Journal reports the deal will be funded by private-equity firm TPG and other investors.

Meanwhile, UBS (UBS 35.29, +1.64) is posting a healthy gain after being upgraded to Buy from Neutral at Merrill Lynch.

As a result, the financials sector has climbed 1.7%, and is providing leadership.

Microsoft (MSFT 29.27, +0.11) sent Yahoo! (YHOO 27.81, -0.55) a letter, warning that if Yahoo does not accept its Jan. 31 $44.6 billion offer, Microsoft will take its offer hostile by going directly to shareholders, according to reports. Yahoo responded that it is open to a deal with Microsoft, but feels the current offer undervalues the company.

In other deal news, Novartis (NVS 50.82, -1.30) is paying $11 billion to acquire a 25% stake in Alcon (ACL 153.61, +5.17) from Nestle.

Crude oil has rallied 2.9% to $109.25 per barrel. There does not appear to be a specific catalyst for the gains. As a result, the energy sector (+1.7%) has been a standout.
DJ30 +86.87 NASDAQ +13.81 SP500 +11.96 NASDAQ Dec/Adv/Vol 1138/1641/710 mln NYSE Dec/Adv/Vol 914/2095/471 mln

The stock market is trying to recover back to its session highs. The recent gains have been broad-based, with all ten economic sectors making it back to positive territory. Treasuries are facing some selling interest, with the 10-year note shedding 24 ticks.DJ30 +68.55 NASDAQ +10.16 SP500 +9.25 NASDAQ Dec/Adv/Vol 1140/1608/601 mln NYSE Dec/Adv/Vol 927/2046/396 mln

The Nasdaq fell to the unchanged mark, but has since recovered a bit as it posts a modest gain. All sectors have slipped off their best levels. Materials is now up only 0.8%, after being up as much as 1.9%. It remains the only sector in positive territory year-to-date, with a 3.7% advance.DJ30 +47.17 NASDAQ +8.46 SP500 +7.75 NASDAQ Dec/Adv/Vol 1167/1555/505 mln NYSE Dec/Adv/Vol 921/2005/328 mln

The major indices continue to post a gain, but are off their best levels of the morning. Four of the ten economic sectors are in negative territory, although their losses are modest.

The stock market is now up 9.6% from its 52-week low that was reached on March 17, with financials rebounding 17.8%.DJ30 +34.36 NASDAQ +7.02 SP500 +6.55 NASDAQ Dec/Adv/Vol 1190/1409/364 mln NYSE Dec/Adv/Vol 954/1903/235 mln

After dipping a bit, the major indices are trading near their opening highs. Washington Mutual (WM 11.95, +1.78) is spiking 17.5% on the capital infusion report.

The energy sector (+1.7%) is showing strength as crude rallies 2.1% to $108.45 per barrel. There is not a specific catalyst for the gain in crude oil prices. The materials sector (+1.8%) is providing leadership, as the fertilizer & agricultural chemicals group extends its rally.

Defensive oriented utilities (-0.2%), consumer staples (flat) and healthcare (+0.2%) are underperforming on a relative basis.

This session's economic calendar is light, with only the February consumer credit report at 15:00 ET.DJ30 +56.18 NASDAQ +13.14 SP500 +8.26 NASDAQ Dec/Adv/Vol 937/1516/229 mln NYSE Dec/Adv/Vol 780/2002/159 mln

The major indices open on a high note. Financials (+0.9%) are outperforming after the Wall Street Journal reported Washington Mutual (WM) is close to getting a $5 billion capital infusion from a private equity group and other investors.

Also topping headlines, is news that Microsoft (MSFT) sent Yahoo! (YHOO) a letter that stated Yahoo has three weeks to accept Microsoft's offer. Yahoo responded it is not against a deal with Microsoft, but the current offer is not in the best interest for Yahoo's shareholders.

DJ30 +43.90 NASDAQ +9.97 SP500 +6.91

S&P futures vs fair value: +9.7. Nasdaq futures vs fair value: +6.2.

S&P futures vs fair value: +9.4. Nasdaq futures vs fair value: +6.0.

S&P futures vs fair value: +11.9. Nasdaq futures vs fair value: +10.8. Current indications suggest a positive start to trading. In commodity trading, crude oil is up 1.1% to $107.38 per barrel. Gold is up 0.7% to $915.40 per ounce.

S&P futures vs fair value: +11.3. Nasdaq futures vs fair value: +10.3. Futures suggest a higher open to the trading day. Washington Mutual (WM) is close to completing a deal to get a $5 billion capital infusion from private-equity firm TPG and other investors, according to the Wall Street Journal. Microsoft (MSFT) has threatened a hostile takeover of Yahoo!(YHOO), if Yahoo does not agree to a merger within the next three weeks, according to the Wall Street Journal. Yahoo responded that it is not opposed to a deal with Microsoft, but feels the current offer undervalues Yahoo. In other deal news, pharmaceutical company Novartis AG (NVS) is buying a 25% stake in eye-care product maker Alcon (ACL), and may purchase another 52%.

06:13 am : S&P futures vs fair value: +12.0. Nasdaq futures vs fair value: +12.0.

06:13 am : FTSE...5990.30...+43.20...+0.7%. DAX...6826.34...+62.34...+0.9%.

06:13 am : Nikkei...13450.23...+157.01...+1.2%. Hang Seng...24578.76...+314.13...+1.3%.

Stocks Head to Higher Open

Stocks were poised to open higher Monday after several reports of potential corporate deals, including speculation Washington Mutual Inc. will get a $5 billion investment from private equity firms.

The nation's largest thrift is in talks with buyout shop TPG Inc. about a possible capital injection, according to The Wall Street Journal. The company, which has suffered big losses tied to subprime mortgages, would become the latest U.S. financial institution to reach such a deal.

In addition, Microsoft Corp. gave Yahoo Inc. a three week deadline to agree to a takeover, or Microsoft would launch a proxy fight for control of the company. Yahoo said Monday the deal isn't in the best interests of its shareholders, and called the proxy threat counterproductive.

And Swiss pharmaceutical maker Novartis AG said it will spend about $38 billion in a two-step bid for a majority stake in U.S. eye-care company Alcon Inc.

Earnings season unofficially begins after the closing bell when Alcoa Inc., the world's third-largest aluminum producer, is scheduled to release first-quarter results.

Dow Jones industrial average futures rose 69, or 0.70 percent, to 12,679. Standard & Poor's 500 index futures advanced 11.90, or 0.87 percent, to 1,383.80. Nasdaq 100 index futures rose 15.75, or 0.84 percent, to 1,885.50.

Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.52 percent from 3.47 percent late Wednesday.

Light, sweet crude rose $1.16 to $107.39 in premarket electronic trading on the New York Mercantile Exchange. Gold was higher, and the dollar was mixed against other major currencies.

There were no major economic reports scheduled to be released during the session.

Overseas, Japan's Nikkei stock average rose 1.18 percent. Britain's FTSE 100 added 0.95 percent, Germany's DAX index rose 0.32 percent, and France's CAC-40 added 1.13 percent.

Tech stocks look for direction in early trading

Technology stocks put in a mixed early trading performance Wednesday. Gains came from Dell Inc. (DELL:19.98, +0.15, +0.8%) , Oracle Corp. (ORCL:19.63, +0.12, +0.6%) and Google Inc. (GOOG:444.29, +4.45, +1.0%) , while decliners included Apple Inc. (AAPL:126.20, -1.15, -0.9%) , Hewlett-Packard Co. (HPQ:47.54, -0.38, -0.8%) and IBM Corp. (IBM:116.41, -0.08, -0.1%) . Take-Two Interactive Software Inc. (TTWO: 25.00, +0.35, +1.4%) shares rose 31 cents to $24.99 after the video game publisher on Tuesday raised its quarterly outlook due to strong advance orders of "Grand Theft Auto IV." The tech-heavy Nasdaq Composite rose 7 points to 2,262.

EU approves Google's DoubleClick bid

European Union regulators say Internet portal giant's $3.1 billion bid for online ad tracker won't hurt competition.

European Union regulators have given a green light to Google Inc.'s $3.1 billion (€2.13 billion) bid for online ad tracker DoubleClick, saying the deal will not hurt competition for online ads.
Critics have complained the deal would give Google (GOOG) too much power.

But the European Commission says it found no proof that Google and DoubleClick would be able to squeeze out competitors. That is because Microsoft, (MSFT) Yahoo (YHOO) and AOL provided "credible" alternatives for placing ads on Web sites.

The commission says Google and DoubleClick are not currently rivals. It says Google's purchase even of a potential competitor would not hurt competition in the online ad market.

Not 'going to get into a fight' with Microsoft

News Corp. (NWS.A:17.79, -0.37, -2.0%) (NWS) Chairman Rupert Murdoch reiterated Monday that the company has no interest in getting into a bidding war with Microsoft (MSFT) over Yahoo (YHOO) . "Yahoo missed out," Murdoch said of the search engine and portal, having acquired Overture several years ago, only to underspend on it and watch Google (GOOG) overtake Yahoo with a more than 60% share of the search engine market share in the U.S. "We're very happy to be in the Google camp," Murdoch went on. "They sell out search advertising, and they pay us well for it." News Corp. is the parent company of Dow Jones, which includes MarketWatch.

Facebook and Vodafone

Facebook Links Up With Vodafone on Mobile Platform

Vodafone is the first operator to use the Facebook for Mobile Operators platform and has started services in the U.K. and Germany, said Jed Stremel, Facebook's director of mobile division. Vodafone will soon expand the program to Greece, Italy, Spain, Ireland and Portugal.

The platform involves giving operators a set of technical specifications intended to resolve some of frustrating hang-ups when using Facebook on a mobile phone rather than a PC, such as smoothing out login problems and opening up other features, Stremel said.

The move by Facebook, which ranks next to MySpace as one of the most popular social networking sites, is intended to grow its user base, which the company estimates at 64 million users. So far, the company says it has 6 million users of Facebook Mobile, an unsupported mobile version of the Web site that will now get full support, Stremel said.

At the moment the mobile site does not have any advertising. Stremel would not reveal the financial details of Facebook's deal with Vodafone, although he said operators will be able to generate revenue from data services as their subscribers access Facebook.

The long-term hope for social networking sites is rich online advertising revenue. Facebook, which has an exclusive deal with Microsoft to place ads on the site, also did not say when it would put advertising on the mobile site.

The company is hoping to lure more operators by the simplicity with which they can enable Facebook, Stremel said.

Facebook has created special Web pages with instructions on how operators can set up their systems, he said. The instructions, for example, let operators add system settings that will let their subscribers send MMS (Multimedia Messaging Service) with photos or video to their Facebook profiles, Stremel said.

The platform also includes other specifications designed to stop abuse of Facebook, such as spamming, Stremel said. When someone sends their first MMS with a photo to their profile, the user is sent back a confirmation message with a code or a link. That confirmation then links that person's phone with their Facebook account, Stremel said.

Microsoft-Yahoo Deal Likely To Go Through

Yahoo Inc.'s (YHOO) stock was coasting just below Microsoft Corp.'s (MSFT) $31-a-share offer price Tuesday morning as more analysts said they believe the marriage will likely be consummated - even as they cautioned investors to be ready for surprises.

Yahoo has yet to respond to Microsoft's $44.6 billion bear-hug bid to acquire the Internet giant, a move which has prompted rival Google Inc. (GOOG) to publicly voice its opposition to the proposed merger.

On Tuesday, Yahoo was downgraded from buy to neutral by Banc of America Securities. It was the third such downgrade since Microsoft announced its offer on Friday, following similar moves by Susquehanna Financial Group and Soleil Securities Group.

The downgrades came after Yahoo's stock zoomed up more than 50% following the bid - which put the stock in range of several analysts' price targets.

In their reports, many analysts predict that the deal will likely happen and that, for now, investors would be wise to stick close to Microsoft's offer price, which they describe as generous.

"Given the significant premium above the Jan. 31, 2008, stock price, we believe shareholders would be apt to take advantage of this offer," analyst Brian Pitz of Banc of America Securities wrote in a note to clients.

Crawford Del Prete of International Data Corp. said he thinks the deal will eventually happen.

"But I think, given that it's hostile, it will take some time for Yahoo to sort through its options," he said in an email. "However, in the end I expect that they will conclude that this is the best option for shareholders, given the price that was offered and the absence of other suitors."
Still, there could be surprises.

Pitz pointed to reported negotiations between Yahoo and Google on a possible deal to outsource Yahoo's search ads to its rival as a way of blocking the Microsoft bid.

Microsoft's bid could also go higher and, contrary to the view of some observers, another potential buyer could emerge, he said.

"While it's difficult to raise debt in the current market environment, we believe a rival bid from a private-equity consortium is also possible," Pitz said.

Analyst Mark Mahaney of Citigroup, who raised his target price for Yahoo to $31 a share from $22, cited the two scenarios in a research note, but didn't give them as much as weight as other potential outcomes.

He said the $45 billion price tag and "the strategic value of Yahoo to Microsoft make the likelihood of a successful competing bidder very low."

An outsourcing deal with Google would be more likely and could be a viable strategy that could appease Yahoo's shareholders, he said.

But Mahaney gave more credence to another possibility: That Yahoo will reject Microsoft's offer, prompting the Redmond, Wash.-giant to bid higher, with the two giants eventually coming to an agreement.

"The deal makes significant strategic sense for Microsoft," he said. "Our review of bid histories in the software space makes us think this is the most likely outcome."

Mahaney cited another software giant, Oracle Corp. (ORCL), which has been on a buying spree over the past several years. In two prominent unsolicited bids - for PeopleSoft Corp. and, more recently, BEA Systems Inc. (BEAS) - the company ended up raising its offer price.

Many analysts still believe the proposed merger between Microsoft and Yahoo would meet stiff regulatory challenges in the U.S. and Europe.

But given Google's dominant position in online advertising, some of them believe Microsoft would clear this hurdle.

"We estimate that Microsoft and Yahoo today account for, at most, 30% of total U.S. online advertising, with their combined market share less in Europe," Mahaney said. "Thus, while we would expect substantial regulatory review, we assign this outcome only a 10% probability

Microsoft vs.Google

EVEN AS GOOGLE (GOOG: 506.80, +11.37, +2.29%) publicly lambastes Microsoft's (MSFT: 29.07, -1.12, -3.70%) proposed acquisition of Yahoo (YHOO: 28.98, -0.35, -1.19%), the search leader's stock is cratering, closing below $500 for the first time since August. But given the arduous challenge of making any giant acquisition work, especially one as fraught with potential delays and pitfalls as this one, Google's managers may be secretly licking their chops. Assuming the deal gets done — and that's a big if — Google's two largest competitors will be hindered by years of complicated integration. If anyone should be up in arms, it's probably shareholders in Microsoft.

"Google has to put up a stink just because that's their role in this situation," says Roger Kay, president of Endpoint Technologies Associates, a market intelligence firm. "But if I were in the boardroom at Google I would say something like, 'Let's act really upset about this deal but then let it slip through our fingers and have it go through.'"

Kay points out that the average for large integrations is two years, and this one is more complicated than most. Yahoo is based in Silicon Valley; Microsoft (already hardly beloved by the Yahoos) sits up in Redmond, Wash. The cultures are different. The engineering and marketing teams need to be sorted and assimilated. Yahoo operates on a lot of open source software. Microsoft, of course, runs on Windows. Just making the back ends of the two operations work together will be a tough technical challenge in and of itself.

"This is going to take project management on a scale that the Microsoft guys have never done before, and that is a formidable obstacle," Kay says. "And even if they're successful it's going to take a lot of energy and they will be somewhat distracted. That could give Google an opening."
Citigroup analyst Mark Mahaney pointed to that Friday after the proposed merger was announced. "This deal would be a material negative for Google if it were to change user behavior, which would then lead to a shift in ad spending," the analyst wrote. "But we don't think a Microsoft/Yahoo! combination would change user behavior at all. And we could see a scenario by which Google would actually gain more market share due to industry uncertainty over the integration of the deal."

Then there's the unknown of when this shotgun marriage will be consummated. Canaccord Adams analyst Peter Misek wrote Monday that if the deal gets done, competitive gains vs. Google aren't likely to start to emerge until 2009 at the earliest. Throw in the probability of antitrust reviews here and in Europe, and a closing could be pushed out even further. Bank of America Securities downgraded Yahoo to Neutral (Hold, essentially) from Buy Tuesday, saying that "the acquisition could face significant regulatory hurdles in the U.S. and particularly in the E.U., which could delay the acquisition from closing for quite some time."

Microsoft's big problem is that it needs to convert its piles of cash into capital for sustainable businesses that are going to make huge bucks a decade from now. But it's hard to see how throwing billions of dollars at Yahoo serves that end. Microsoft is a sprawling company with five businesses, and all of them are subservient to the company's lifeblood: Windows and Office. The online division isn't just an also-ran to Google and Yahoo; it's the only part of the company that loses money.

Meanwhile, Yahoo's been flailing about for years, losing share to Google and missing out on Web 2.0 innovations like social networking. True, it's the world's biggest destination on the Internet, but still...it's a portal. How 1990s. How quaint. No company is better than Microsoft at spinning a strategic vision, even if the quality of its software and hardware products too often falls short of its rhetoric. But to hear Chief Executive Steve Ballmer extol the opportunities and virtues of the deal, it's clear he's been drinking his own Kool-Aid.

7 Stocks You Need to Know for Friday

Microsoft (NasdaqGS:MSFT - News) beat earnings estimates on Thursday afternoon, announcing $0.50 EPS over a consensus of $0.46 EPS. MSFT's PowerRating (for Traders) is 6

Tempur-Pedic (NYSE:TPX - News) missed earnings, reporting $0.52 EPS versus expectations of $0.53 EPS. TPX's PowerRating (for Traders) is 2.

Cash America (NYSE:CSH - News) also missed earnings, with $0.88 EPS versus a consensus of $0.90 EPS. CSH's PowerRating (for Traders) is 3.

Caterpillar (NYSE:CAT - News) reports earnings on Friday morning, with traders expecting $1.50 EPS. CAT's PowerRating (for Traders) is 3.

When Commerce Bancorp (NYSE:CBH - News) announces quarterly results tomorrow morning, analysts will be looking for $0.30 EPS. CBH's PowerRating (for Traders) is 5.

Harley-Davidson (NYSE:HOG - News) is set to report $0.82 EPS on Friday before the bell. HOG's PowerRating (for Traders) is 4.

WW Grainger (NYSE:GWW - News) is expected to announce $1.27 EPS tomorrow morning. GWW's PowerRating (for Traders) is 3.